Extractive summaries of and key takeaways from the articles curated from TOP TEN BUSINESS MAGAZINES to promote informed business decision-making | Week 270 |November 11-17, 2022
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Shaping Section : Ideas and forces shaping economies and industries
Who wins from the unravelling of Sino-American trade?
The Economist | November 6, 2022
From disease and downturn to the deterioration in Chinese-American relations, there has been no let-up to the blows battering the world’s trading system. The latest threat stems from the possibility of another global recession. Only two years after the world sank into a covid-induced slump, shipping bosses are again warning of grim prospects for international trade.
Even beyond the ups and downs of the economic cycle, deeper shifts in global trade are taking place. Firms are reconsidering their production decisions, and governments are pushing the process along. Such shifts might have seemed outlandish in 2018 when Donald Trump, then America’s president, first slapped tariffs on imported Chinese goods. Since then, a pandemic has struck, and President Joe Biden has banned the export of advanced semiconductor technology to China and plans to provide subsidies worth hundreds of billions of dollars for investment in domestic manufacturing. A rejigging of trade now feels inevitable rather than unimaginable—and the outline of its new geography is becoming clearer.
Global trade in goods staged an impressive bounceback after the covid-19 downturn in 2020. But not all trade routes are flourishing. When Mr Trump took his protectionist turn, there was hope that economies in Africa and Latin America might attract some of the business that would have otherwise flowed to China. “Friendshoring” may be happening, but not on a grand scale. Instead, the biggest winners from changing trade patterns are to be found in Asia. China used to account for nearly half of Asia’s exports to America; now it accounts for just over a third. Nor is this simply an American trend. China is also importing more from Asia.
Cultivating new sources of goods or components takes time and investment, so the shift in trade patterns now visible in the data mostly reflects choices firms made well before this year’s geopolitical ructions. Some redistribution of trade would have happened even in placid economic conditions. Rising labour costs in China, for instance, would have made it attractive to move low-value sorts of manufacturing—in textiles and apparel, say—to places like Bangladesh. However Mr Trump’s tariffs seem to have played an important role. And the outcome is overall America is now much less dependent on Chinese goods, from furniture to semiconductors.
3 key takeaways from the article
- From disease and downturn to the deterioration in Chinese-American relations, there has been no let-up to the blows battering the world’s trading system. The latest threat stems from the possibility of another global recession.
- Even beyond the ups and downs of the economic cycle, deeper shifts in global trade are taking place. Firms are reconsidering their production decisions, and governments are pushing the process along. A rejigging of trade now feels inevitable rather than unimaginable—and the outline of its new geography is becoming clearer. The biggest winners from changing trade patterns are to be found in Asia.
- In time, as the consequences of recent geopolitical developments accumulate, an ever larger share of the value in Asian supply chains may concentrate outside of China rather than within it.
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Topics: Global Economy, Global Commerce, Asia, USA, China
Strategy & Business Model Section
Scaling up: How founder CEOs and teams can go beyond aspiration to ascent
By Claudy Jules et al., | McKinsey & Company | November 9, 2022
The mystique surrounding public companies like Alphabet and Amazon and their evolution from innovative start-ups to brand icons has many executives believing that there is only one “right” path to growth. But behind these and other companies’ scale-up success stories is a distinctive set of organizational capabilities that other founder CEOs may be able to develop as they move their start-ups from aspiration to ascent to peak performance.
Through their extensive research and years of experience working with founder CEOs, the authors have learned a lot about what the hyperscaling journey entails and how it differs from gradual growth. Based on these insights hyperscalers outperform industry peers, remain resilient during downturns, and maintain strong cash positions. They set the bar high for corporate performance, and they aren’t afraid to make bold moves. But how do they do these things? Six factors crucial to the success of companies’ fast-growth expeditions are: companies need a structure built especially for product or portfolio growth, effective ways of working, a strong talent development engine, a distinctive growth culture, leadership capabilities at scale, and an aligned founder CEO and top team who set clear directions and make decisions that stick—no second-guessing.
Founder CEOs and teams will need to adapt their structures, operations, talent, cultures, and leadership as they mature. As the organizations move from early stage to ascending and then pursuing their maturity, they need to:
- Establish the right accountabilities, establish the right structure to support expanded priorities to simplify increasingly complex organizations.
- Build the right governance, prioritize fast execution instead of bureaucracy to increase agility.
- Identify pivotal roles and strengthen talent engine, build a deep bench of talent to rethink metrics for performance management and DEI
- Focus on what makes us “us”, strengthen performance execution to remain connected to purpose
- Move from “expert” to “people leader” and from “technical” to “adaptive” leadership, pass on the founder’s individual leadership identify to teams, to mindsets from leading teams to leading the organization
- Reset personal priorities, set ambition to top team, to measure the effectiveness of the top team
3 key takeaways from the article are:
- The mystique surrounding public companies like Alphabet and Amazon and their evolution from innovative start-ups to brand icons has many executives believing that there is only one “right” path to growth. But behind these and other companies’ scale-up success stories is a distinctive set of organizational capabilities that other founder CEOs may be able to develop as they move their start-ups from aspiration to ascent to peak performance.
- Six factors that are crucial to the success of companies’ fast-growth expeditions are: companies need a structure built especially for product or portfolio growth, effective ways of working, a strong talent development engine, a distinctive growth culture, leadership capabilities at scale, and an aligned founder CEO and top team who set clear directions and make decisions that stick—no second-guessing.
- Founder CEOs and teams will need to adapt their structures, operations, talent, cultures, and leadership as they mature.
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Topics: Strategy, Startup, Business Scaling
Every Company Needs a Political Strategy Today
By Blair Levin and Larry Downes | MIT Sloan Management Review | November 09, 2022
What if your efforts to comply with fast-changing laws and regulations are met with condemnations from employees, customers, and investors? For example. These were not questions that business leaders were asking themselves even a few years ago. Now they must. Worse, such questions are certain to increase in both quantity and importance. You need a political strategy — one that supports and complements your business strategy. In addition to this, over the past decade, enterprises that focus on stakeholder value prioritize customers, employees, suppliers, and policymakers, embedding their aspirations into strategies and branding, just as they do to win the support of investors.
Your company’s specific response to political upheavals will depend on the nature and location of your business, as well as the pledges you have already made to stakeholders. But sitting on the sidelines and hoping that the next crisis will quickly blow over is anything but safe. Instead, every enterprise should start by developing an actionable political strategy, using the familiar tools of competitive analysis and disruptive innovation. Five principles the authors encourage the companies can embrace are:
- Be fast. Social, cultural, and political disruptions are arriving at an accelerating pace. To protect your brand and markets, you need a process to rapidly evaluate the impact of court decisions, legislation, and regulatory upsets on your stakeholders’ values — and the capacity to respond quickly and decisively.
- Be consistent. Fueled by digital technologies, stakeholders can quickly weigh your responses and compare them across enterprises, industries, and geographies. So pay close attention to how other enterprises respond to sudden shifts in policy, and learn from their successes and mistakes.
- Be honest. No stakeholder will be satisfied with all of your responses to public policy disruptions. Even those who disagree strongly, however, appreciate corporate communications that are clearly stated, candid, and timely. Hedging, equivocating, and straining to balance opposing values that simply can’t be rationalized will only make things worse. Transparency won’t eliminate all risk of damage to your brand, but it will minimize the harm.
- Be organized. Trade associations, chambers of commerce, and business roundtables can be excellent partners in formulating unified and effective responses to political upheaval. As the civil rights era demonstrated, business coalitions can be a potent weapon for social change.
- Be proactive. Develop and support litigation strategies that align with your stakeholder values. In implementing these principles, always prioritize employees, customers, and other stakeholders over the increasingly short-term or even contradictory goals of elected officials.
3 key takeaways from the article:
- Organizations need a political strategy — one that supports and complements their business strategy. In addition to this, over the past decade, many publicly traded companies have shifted from a singular focus on investors to serving a broader range of constituencies, a concept known as stakeholder value.
- Your company’s specific response to political upheavals will depend on the nature and location of your business, as well as the pledges you have already made to stakeholders.
- Every enterprise should start by developing an actionable political strategy, using the familiar tools of competitive analysis and disruptive innovation. Five principles the companies, in their efforts to pursue a political strategy, can embrace are: be fast, be consistent, be honest, be organized, and be proactive.
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Topics: Politics, Strategy, Uncertainty
Leading & Managing Section
Number One in Formula One
By Anita Elberse | Harvard Business Review Magazine | November–December 2022 Issue
Formula One (F1) is the most prestigious motor-racing competition on the planet. It is incredibly hard to win a Formula One race even once. Everything—from the engineering of the car in the factory to the multitude of decisions made on the track during a race weekend—needs to come together in order to produce a victory.
Nonetheless, there is one team, Mercedes-AMG Petronas (or Mercedes, for short), that has managed to dominate F1 over the past decade. It has put together the longest winning streak the sport has ever seen: In the 2021 season Mercedes won its eighth consecutive. Although that remarkable series of victories was a team effort, one person was at the helm of the organization throughout—Toto Wolff, the team principal. How has Wolff done it? How has he led Mercedes to one victory after another? Last year the author and his colleague did a case study on Mercedes involving Wolff himself. The author distilled his observations into six lessons for leaders hoping to cultivate their own winning teams, whether in sports or other realms.
- Set the Highest Standards—for Everyone. Wolff is a self-admitted stickler for even the smallest details. During his first and last meeting the principal he is going to replace, the outgoing principal said It’s the engineering that makes us win,’ and Wolff replied, ‘No, it’s the attitude. It all starts with an attention to detail.’” Wolff’s approach has trickled down into every aspect of the organization.
- Put People Front and Center. “I don’t run racing cars,” Wolff is fond of saying. “I run people that run racing cars.” He seeks to make his organization a people-centered one, and he genuinely cares about the individuals he works with. “Each person in the organization has hopes, dreams, fears, and anxieties, and it is important for me to understand what those are—to learn what drives a person,” said Wolff.
- Analyze Mistakes—Even When Winning. Performing with excellence does not mean that mistakes are never made. When something fails, Wolff is all about what he calls tough love or brutal honesty.
- Foster an Open, No-Blame Culture. In Wolff’s view, analyzing mistakes should not lead to assigning fault. In fact, Wolff advocates a no-blame culture and makes a point of—very publicly—backing individuals who make missteps. When he talks about the people on his team, he often refers to them as his “tribe” and defends them staunchly. We live by the mantra See it, say it, fix it.” Wolff is also not afraid to be honest with himself and others about his own failures.
- Trust Superstars but Maintain Authority. One of the most challenging aspects of a team principal’s job is managing the drivers. They are global celebrities, with all the demands on their time that fame entails. Importantly, although Wolff gives his drivers considerable autonomy, he is not afraid to be a strong leader when the situation calls for it.
- Relentlessly Battle Complacency. Wolff deeply dislikes losing. “I cannot stand the humiliation we would face,” “and I will do everything I can to avoid it. For me, the joy of winning is normally much less intense than the pain of losing. The fear of losing stays with me. And that’s helpful—I wouldn’t ever want to get used to it. Getting used to losing is the biggest reason for losing.” Several executives made it clear that this mindset has permeated the culture at Mercedes and in fact may be the key to the team’s winning streak.
3 key takeaways from the article
- Formula One (F1) is the most prestigious motor-racing competition on the planet. It is incredibly hard to win a Formula One race even once. Everything—from the engineering of the car in the factory to the multitude of decisions made on the track during a race weekend—needs to come together in order to produce a victory.
- There is one team, Mercedes-AMG Petronas (or Mercedes), that has managed to dominate F1 over the past decade. Although that remarkable series of victories was a team effort, one person was at the helm of the organization throughout—Toto Wolff, the team principal.
- Six lessons for leaders that could be distilled based on Mercedes’ case study are: Set the Highest Standards—for Everyone, Put People Front and Center, Analyze Mistakes—Even When Winning, Foster an Open, No-Blame Culture, Trust Superstars but Maintain Authority, and Relentlessly Battle Complacency.
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Topics: Leadership, Trust, Team, Complacency
Perspectives And Beliefs: Getting Outside Of Your Box
By Melinda Fouts | Forbes Magazine | November 15, 2022
Thinking outside the box is an old, familiar phrase, yet, how do you get out of your box? You cannot think outside the box unless you know what your box is made of. Your box is your beliefs derived from your upbringing and your culture. These beliefs shape how you perceive the world and take in information and are instrumental in making decisions. Even when you know some of your beliefs, many of them are unknown, which creates blind spots. These unknown beliefs are, without you realizing it, guiding your behaviors and actions and, ultimately, your decisions.
Many examples where leaders are making decisions based on perceptions and beliefs, and they have no awareness of what is really driving the decision. You often hear, “Why didn’t I think of that?” Or, “why didn’t I see that?” Or, “Can I do that?” These are all statements illuminating how hard it is to get out of one’s box and think differently. Blind spots can be subtle and once they are brought in our awareness to them, there can be a cascade effect to uncovering other beliefs and perspectives.
By bringing understanding and awareness, only then can you step back and alter your behavior. Having a deep understanding of what drives your behavior can help you also question your perception. In this way, you’re taking steps to think outside of your box. Thinking outside the box is to have a change in your lens of perception and think unconventionally.
A good exercise to work on this is to notice how you respond when your belief or idea is challenged. It is an opening to question yourself and be open to other possibilities. When you hear a different perspective and feel an inner charge of resistance, feel that charge, take a deep breath and then become curious; ask “how” and “what” questions to inquire into the other person’s point of view. In this way, you can become more aware of a belief you hold onto. Finally, the hardest one to encounter is the unconscious biases embedded in your beliefs. Again, when you feel a strong emotion rising up, become curious about yourself. Ask yourself, “How come I feel this charge or this way towards a person?”
3 key takeaways from the article
- Thinking outside the box is an old, familiar phrase, yet, how do you get out of your box? You cannot think outside the box unless you know what your box is made of. Your box is your beliefs derived from your upbringing and your culture. These known and unknown beliefs are, without you realizing it, guiding your behaviors and actions and, ultimately, your decisions.
- By bringing understanding and awareness, only then can you step back and alter your behavior.
- A good exercise to work on this is to notice how you respond to a different perspective and feel an inner charge of resistance, feel that charge, take a deep breath and then become curious; ask “how” and “what” questions to inquire into the other person’s point of view. In this way, you can become more aware of a belief you hold onto.
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Topics: Decision-making, Biasness, Beliefs, Thinking
Entrepreneurship Section
7 Rules That Helped Eileen Fisher Build Her Sustainable Fashion Empire
By Christine Lagorio-Chafkin | Inc Magazine | November 2022 Issue
With just $350 in the bank, Eileen Fisher founded her ready-to-wear fashion brand in 1984 in New York City. Today, Eileen Fisher is a nearly 800-person company based in Irvington, New York. It’s on track to hit $265 million in revenue this year. The 72-year-old Fisher reflects on what has mattered most to her over the years.
- Lead With Your Gift. Surround yourself with the people who know how to do what you can’t. Then we work as a collective.
- Learn to Live With the Ebb and Flow. When you’re running a company, there are a lot things that require direction, planning, and preparation. And at the same time, it’s important to be open to things that show up spontaneously. You really need both. You need the moments of chaos, as well as the moments of order and planning and discipline.
- Give More Than You Take. As the company grew and the brand started making extra profits, the first impulse was to share profits with employees, so they created an ESOP. Fisher thinks all companies should share ownership. She actually thinks it should be regulated. Companies might not like her saying this, but if we were forced to share a part of our profits, it could help solve the huge issue of wealth disparity.
- Hold Yourself to Higher Standards. We should be responsible for externalities. We impact the air, we impact the water, and we don’t pay for these things.
- Let Your Failures Go. Fisher has this philosophy that out of the problem comes the next opportunity. Getting something wrong just means that something else is supposed to happen. Accept your mistakes and just keep going.
- Figure Out What Works to Fight Burnout–and Stay Faithful to It. This could be yoga or meditation.
- Leave the World Better Than You Found It
3 key takeaways from the article
- With just $350 in the bank, Eileen Fisher founded her ready-to-wear fashion brand in 1984 in New York City. Today, Eileen Fisher is a nearly 800-person company based in Irvington, New York. It’s on track to hit $265 million in revenue this year.
- The 72-year-old Fisher reflects on what has mattered most to her over the years: Lead With Your Gift; Learn to Live With the Ebb and Flow; Give More Than You Take; Hold Yourself to Higher Standards; Let Your Failures Go; Figure Out What Works to Fight Burnout–and Stay Faithful to It; and Leave the World Better Than You Found It.
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Topics: Startup, Scale-up, Growth Strategy
3 Ways Leaders Can Develop Their Diplomacy Skills to Motivate Their Workforce and Drive Productivity
By Dr. Samantha Madhosingh | Entrepreneur Magazine | November 7, 2022
Diplomacy isn’t just important in politics – it’s also a fundamental set of skills in the workplace. Good diplomacy skills enable leaders to handle sensitive issues, navigate tricky conflicts and look at the facts objectively, without biased interpretation. A diplomatic leader will therefore create a healthy culture where people can work well together, even in stressful environments.
Effective communication, empathy, and creative problem-solving are just three of the important skills a leader could focus on if they want to be more diplomatic. How do you improve these skills? Three ways to improve:
- Focus on listening to understand. When we listen to understand, instead of listening to respond, we stay more present to what is being said in the moment. Listen to the speaker without interrupting with your own point of view. As you listen, focus on both verbal and nonverbal communication. What is really being said? The goal of your listening is to understand the meaning and intention of the speaker correctly, as this will give you a good foundation for your diplomacy skills.
- Be supportive of creative solutions. When you’re in a challenging meeting at work, think about how you can be open to innovative ideas and solutions from staff. Focus more on the various options for resolving the issues at hand. Allow for ideas that might be outside of the box. By doing this, you’ll build the knowledge that there are multiple ways to look at a situation. Your team’s insights might expand your viewpoint to something you’d never considered and having diverse input makes for a stronger team.
- Practice effective communication. A large part of diplomacy is clear and effective communication. Build an environment of trust where your team feels they can converse with leaders without fearing retribution. Implement an “open door policy,” as this will spread the message that people can come to you with new ideas or to share their concerns. Be as transparent as possible with your team with information about how things are going. Share the highs and the lows of the week/month/quarter.
Ultimately, being a leader is about empowering your staff to do their best work and encouraging people to work well together to increase engagement and productivity. And this really is what diplomacy is all about.
3 key takeaways from the article
- Diplomacy isn’t just important in politics – it’s also a fundamental set of skills in the workplace. Good diplomacy skills enable leaders to handle sensitive issues, navigate tricky conflicts and look at the facts objectively, without biased interpretation.
- Effective communication, empathy, and creative problem-solving are just three of the important skills a leader could focus on if they want to be more diplomatic. How do you improve these skills? Three ways to improve are: focus on listening to understand, be supportive of creative solutions, and practice effective communication.
- Ultimately, being a leader is about empowering your staff to do their best work and encouraging people to work well together to increase engagement and productivity. And this really is what diplomacy is all about.
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Topics: Diplomacy, Communication, Politics